Study: ObamaCare could cost billions more than anybody projected

posted at 4:41 pm on September 11, 2013 by Erika Johnsen

Here’s a complementary pair of Reuters stories from the early half of the week, just to help build up the sense of excitement I’m sure you’re all feeling as the first open enrollment day of ObamaCare approaches in T-minus three weeks.

First, when the much-vaunted ObamaCare exchanges open for business on October 1st, the potential for massive delays, abuse, and fraud through the largely untested online systems is still going to be huge:

“At this moment, not a single state appears to be completely ready,” W. Brett Graham of the Salt Lake City-based consulting firm Leavitt Partners said in testimony to a Republican-controlled oversight panel in the House of Representatives.

He said states should be capable of providing “baseline functionality” when enrollment begins in three weeks. But he cautioned about the potential for delays: “Most, if not all, exchanges will experience a rocky enrollment period as they work to overcome both known and unknown operational challenges.” …

Some states are having difficulty integrating exchange technology with existing Medicaid and other state systems, according to Graham, who said the results could include slow enrollment, delayed eligibility determinations and increased potential for fraud and abuse.

Well, you might say, so what if the states aren’t ready to cope with the still-unknowable volume of people who’ll soon begin shifting onto the exchanges? We always knew this was going to be a messy and learning-oriented process with lots of, ahem, glitches. The point is that eventually everything will be smoothed out and ObamaCare will help us reduce both consumer health care costs and insurance premiums as well as help control the federal government’s (i.e., taxpayers) health-care spending, right?

Wrong. As estimates of exactly how much the huge new entitlement program that is the “Affordable” Care Act is going to impact the federal debt and deficit have shifted over the past few years (and not in a good way), the fact is that the top-down attempt to remake an entire sixth of the U.S. economy is bound to be fraught with still more unintended consequences and hidden costs than you can shake a stick at. For instance, a new study from Stanford notes that ObamaCare creates a major incentive for employees to eschew their employer-offered plans and instead take the cash and find a subsidized plan through the exchanges, while lots of employers in turn will find that it helps their bottom line to quit offering health insurance and pay the employer-mandate tax instead. This could lead to a huge migration to the exchanges that would stress the system in ways for which the “Affordable” Care Act’s authors never planned, plus add a heck of a lot more costs:

As many as 37 million Americans who receive health coverage through employers may be better off with the government-subsidized insurance plans that will be offered under President Barack Obama’shealthcare reform law for next year, according to a study released on Monday.

The analysis, compiled by researchers at Stanford School of Medicine and published in the journal Health Affairs, suggests that some employees may choose to dump the coverage they receive at work. It also points to a potential counter-trend to surveys of employers, which show that up to 30 percent would consider terminating health coverage for their workers within the first few years of “Obamacare.” …

That scenario, which would cost the federal treasury billions of dollars above what it has already projected, reflects the complicated financial carrots and sticks at the heart of Obama’s 2010 Affordable Care Act (ACA). …

Roughly “37 million people would be financially better off switching to the exchange” from employer-sponsored insurance, said Dr. Jay Bhattacharya of Stanford School of Medicine, who led the study.

If all of these 37 potential incentive-responders were indeed to switch to the exchanges, the government stands to spend up to $132 billion more in subsidies than they projected. Great.

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